Ignore the doom and gloom Headlines about Buying

There is a good reason to buy now instead of waiting for prices to come down.
Consider a typical home that sells for around $219,000. For example, you put down 20% and get a 30 year fixed rate mortgage at today’s rate of 5.5%. With that, monthly principal and interest payments would come to around $995.

So let’s say that 12 months from now the same home sells for 10% less or around $197,000. But by then the recession is over and the Fed starts jacking up interest rates to slow any inflation. Mortgage costs rising just one-half percent, to say 6% or a little more, your monthly payments will actually be similar or even a higher. The same home monthly payments might cost closer to $1,000 per month. In this case, you would not have saved anything.

And to make it more difficult, homes prices would have steadied and sellers will be less willing to negotiate, making any bargains harder to come by. In the mean time, you would have lived in a place you are not happy with.

Housing risks always seem more severe when headlines give indications otherwise, but this is actually the best time to think investing in a home long term.

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